October 27, 2022
What Happens After You Fire a Client?
I snuck off to find a signal just so I could reach out today…
Angie’s question about refunds was that good!
No, I’m not being held captive — I’m just hosting my very first company-wide annual retreat in the Hudson Valley, NY. We’re in the middle of this insanely gorgeous 200+ acre property in the mountains. I can’t wait to share pics with you on IG!
OK, before I go through my snuggly blanket, grabbing a grapefruit Spindrift & another round of those TJs dark chocolate covered pretzels (yep, I brought us blankets, TJ snacks & Spindrift 🤣 #alwayspreparedwithsnacks) —
I want to chat with you about when it’s right (or required) to offer a client a refund.
Keep in mind before you read…
- Refund requests are rare and expected
- It’s better to use any “bad” client experience as a learning opportunity or spot in your biz to do better with pre-qualification
Let’s jump into our legal Q&A sesh! 👇
The Question // Angie asks,
had my first coaching client quit just over halfway through my program. She did not do the work, however I did. A lot of it. She was one of my more needy clients, so much of our interactions were conversations and encouragement through texts. My question is this: Since she quit, or had I fired her (I think she knew it was coming so she broke up with me first ;)) do I reimburse her for the latter half of the program? Or if she refuses to make her last few payments (she’s on a payment plan) what can I do?
The Answer //
Oh, Angie! I’m so sorry this happened. First off: I just want to normalize the fact that not all client relationships go smoothly. Every single coach I know has had someone “quit” or ask for a refund. Everyone I know has dealt with at least one (usually many more) people saying, “I got what I needed from you month 1. I’m going to split now!”
I just think that’s ^ important for us to talk about more, because I never want anyone taking this stuff personally.
Here’s the “good” (?) part about being your own boss. You get to decide how you handle things like this.
Of course there are certain legal rights or obligations you have. But when it comes to refunds — if it feels better to you to release this person and move on, that’s OK too.
Just like it’s also OK for you to stand your ground and say, “no refunds” (if you properly used a contract with that language in it).
If you had fired her, a refund of her remaining time would 100% be the right (and likely legally sound) thing to do.
Since she quit, you can decide whether you’d like to enforce your contract language or not. If she doesn’t pay her remaining payments and you’ve tried collecting them from her yourself, you can explore collections (with an attorney or a private collections company) if you wish.
When you submit someone’s failure to pay to collections, you’ll need a legit contract to prove that the person agreed to pay.
If you use PayPal or something similar to process people’s payments, I’ve seen complaining-clients be successful against coaches in issuing a chargeback threat. (Where they complain to PayPal that they want a refund.)
Typically, if the service hasn’t been offered yet — then PayPal will refund them.
I get angry comments from people on both sides of this issue (“how dare you suggest to send good people to collections!” and “you tell us to have refund policies and then say it’s OK to walk away?! What a joke!”). Everyone is entitled to their opinion and way of running their business.
I’m not saying one approach is better / worse than the other. 😉 I just think it’s my job to let you know what all of your options are and let you decide what’s best for you and your business.
The point is to make decisions that are for YOU and not based on what you think you should do.
And that starts with knowing what your rights are. I also believe it’s incredibly empowering to walk away sometimes, too.
The best approach? Prevention.
Having legit contracts in place early on will chase away “try it before they buy it” clients. And that same contract will be what you’ll use to either try to collect the payment yourself OR submit it to someone to collect it for you.
Each one of my legal templates is a downloadable fill-in-the-blank doc that comes with my signature How-To Video Tutorial specifically for that template, where I walk you through how to fill it out and customize it further to your needs — so no more scratching your head wondering what all that legalese even says!
Get any contract or template you need here — you can fill them out in 15 mins or less! 👇
Wondering what to do if a client refuses to pay in general? Check out this recent blog post: What to Do When a Client Doesn’t Pay.
I brought my HR agency, Paradigm, on the podcast this week to talk about hiring your first contractor, when we should start a company culture & more! Dive in by listening to my pod, On Your Terms, Epi 66 here.
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